Investors have a new but familiar name to consider if they want to trade stocks and exchange-traded funds without the usual commission costs.
Toronto-Dominion Bank on Monday introduced a new mobile app called TD Easy Trade that includes 50 free stock trades per calendar year. After that, clients pay $9.99 a trade, the usual cost at TD’s market-dominating online brokerage, TD Direct Investing.
Easy Trade is separate from TD Direct. If you’re a TD Direct client and want those 50 freebies, you’ll need to open an Easy Trade account and be willing to trade through a mobile device because there’s no Easy Trade website.
Easy Trade is launching at a time of big changes in DIY investing where investors, notably younger ones, are using their phones and not computers to trade and manage their investments. At the same time, a growing number of players in the DIY investing market are eliminating commissions that can cost as much as $9.99 to buy and sell.
It all adds up to more innovation on pricing and features in DIY investing than we’ve seen in decades, but also some confusing options for investors who pilot their own portfolios.
The Wealthsimple Trade app for mobile devices pioneered commission-free trading of stocks and ETFs in Canada, and it’s soon to be joined by another app, MogoTrade. National Bank Direct Brokerage introduced commission-free trading last August, the first traditional online broker to do so, and was quickly followed by Desjardins Online Brokerage.
Easy Trade represents some clever thinking by TD: Stake out some ground in commission-free trading with an app aimed at younger investors, without forgoing the commission revenue generated by its TD Direct Investing clients.
“This is not a response to zero commissions,” Tony Ierullo, vice-president of new to investing and emerging investor solutions at TD Direct Investing, said during an Easy Trade demonstration. “We have no intention or announcements on going to zero commission.”
Easy Trade is actually a reboot of an earlier app for young investors, GoalAssist, that never generated much buzz after its October, 2020, introduction. GoalAssist invited users to set financial goals, then offered them free trading of TD-brand ETFs to build portfolios. Stocks were available, too, but commissions applied.
Now, TD is adding 50 free stock trades a year to sweeten a deal that still includes free trades of TD’s 38 ETFs, including One-Click asset allocation funds that deliver a fully diversified portfolio in one convenient package. Easy Trade dispenses with account maintenance and administration fees, which are common in traditional online investing and can cost $100 or more a year.
Easy Trade’s short learn-as-you-go videos target newcomers to DIY investing, but there are some features that will appeal to more experienced investors. Real-time stock quotes are available, rather than quotes delayed by 15 minutes, and clients have access to U.S. dollar accounts. Having a U.S. dollar account means you can sell U.S. stocks and not have the proceeds automatically converted into Canadian dollars at a stiff cost. Same for dividends paid by U.S. stocks.
Easy Trade lacks the research and portfolio-building tools available from TD Direct Investing, but it does offer a goal-planning function that helps investors link the portfolios they’re building to financial goals. Users decide how much risk they want to take on, then receive ideas on how to proceed in building a portfolio.
A weakness of the goal-planning feature is that it lacks the capability to reconcile goals and risk. For example, there’s nothing to get in the way of someone who sets a house down payment as a goal and then chooses an aggressive investing approach. TD says regulators do not allow it to address matters like this with DIY clients because it’s considered advice. Truth is, you should avoid stocks if you’re scraping together a down payment for a home you plan to buy in the next few years.
Easy Trade launches without a way for clients who don’t bank with TD Canada Trust to easily add money to their account, but this feature will be added in March with real-time transfers of limited amounts of money. Investors are heading into a time of unprecedented choice, both on how to trade and how much to pay for those trades.
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